ACC 225 Week 4 CheckPoint Preparing Balance Sheets and

Statements

QS 4-2
Identifying the accounting cycle
List the following steps of the accounting cycle in their proper order:
a. Preparing the post-closing trial balance.
b. Posting the journal entries.
c. Journalizing and posting adjusting entries.
d. Preparing the adjusted trial balance.
e. Journalizing and posting closing entries.
f. Analyzing transactions and events.
g. Preparing the financial statements.
h. Preparing the unadjusted trial balance.
i. Journalizing transactions and events
SOLUTION
1.
2.
3.
4.
5.
6.
7.
8.
9.

(f)
(i)
(b)
(h)
(c)
(d)
(g)
(e)
(a)

Analyzing transactions.
Journalizing transactions.
Posting the journal entries.
Preparing the unadjusted trial balance.
Journalizing and posting adjusting entries.
Preparing the adjusted trial balance.
Preparing the financial statements.
Journalizing and posting closing entries.
Preparing the post-closing trial balance.
Exercise 4-4

Use the following adjusted trial balance of Webb Trucking Company to

prepare a classified balance sheet as of December 31, 2005.
Account Title
Debit
Credit
Account Title Debit Credit
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,000
Accounts receivable . . . . . . . . . . . . . . . . . . . 16,500
Office supplies . . . . . . . . . . . . . . . . . . . . . . 2,000
Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000

Accumulated depreciationTrucks . . . . . . . .
35,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Accounts payable . . . . . . . . . . . . . . . . . . . . .
11,000
Interest payable . . . . . . . . . . . . . . . . . . . . . .
3,000
Long-term notes payable . . . . . . . . . . . . . . .
52,000
K.Webb, Capital . . . . . . . . . . . . . . . . . . . . .
161,000
K.Webb, Withdrawals . . . . . . . . . . . . . . . . . 19,000
Trucking fees earned . . . . . . . . . . . . . . . . . .
128,000
Depreciation expenseTrucks . . . . . . . . . . . 22,500
Salaries expense . . . . . . . . . . . . . . . . . . . . . 60,000
Office supplies expense . . . . . . . . . . . . . . . . 7,000
Repairs expenseTrucks . . . . . . . . . . . . . . . 11,000
______
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $390,000
$390,000

WEBB TRUCKING COMPANY

Balance Sheet
December 31, 2005
Assets
Current assets
Cash...............................................................................
Accounts receivable.....................................................
Office supplies..............................................................
Total current assets......................................................
Plant assets
Trucks...........................................................................
Accumulated depreciation-Trucks.............................
Land..............................................................................
Total plant assets..........................................................
Total assets......................................................................
Liabilities

$170,000
(35,000)

7,000
16,500
2,000
25,500

135,000
75,000
210,000
$235,500

Current liabilities
Accounts payable.........................................................
Interest payable............................................................
Total current liabilities................................................
Long-term notes payable...............................................
Total liabilities................................................................

$ 11,000
3,000
14,000
52,000
66,000

Equity
K. Webb, Capital ..........................................................
Total liabilities and equity.............................................

169,500
$235,500

K. Webb, Capital is computed as:

Beginning balance......................................................................................... $161,000
Plus: Net income ($128,000 - $22,500 - $60,000 - $7,000 - $11,000).........

27,500

Less: Withdrawals......................................................................................... (19,000)

Ending balance.............................................................................................. $169,500

Exercise 4-5
Use the information in the adjusted trial balance reported in Exercise 4-4 to
prepare Webb Trucking Companys (1) income statement, and (2) statement
of owners equity. The K. Webb, Capital account balance is $161,000 at
December 31, 2004.

WEBB TRUCKING COMPANY

Income Statement
For Year Ended December 31, 2005

Trucking fees earned.................................................................

Expenses
Depreciation expenseTrucks........................................... $22,500
Salaries expense.................................................................... 60,000
Office supplies expense........................................................
7,000
Repairs expenseTrucks.................................................... 11,000
Total expenses.......................................................................

$128,000

100,500

Net income..................................................................................

$ 27,500

WEBB TRUCKING COMPANY

Statement of Owners Equity
For Year Ended December 31, 2005

K. Webb, Capital, December 31, 2004.....................................

$161,000

Plus: Net income.........................................................................

27,500

Less: Owner withdrawals..........................................................

188,500
(19,000)

K. Webb, Capital, December 31, 2005.....................................

$169,500